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TMI Blog2023 (11) TMI 752X X X X Extracts X X X X X X X X Extracts X X X X ..... t revenue and these estimations could not be taken to be the turnover of the assessee disregarding the actual revenue earned by the assessee. No defect in books of accounts has been pointed out by Ld. AO. The deviation in estimation and actual revenue stood explained by the fact that the duration of the project got extended to financial year 2020-21 which is much beyond the agreed original contract period. The revenue projections submitted in the course of Sec. 197 proceedings are merely based on the estimated work completion whereas the revenue shown in financial statements is based on actual work certified by contractor on the basis of survey of work performed. Therefore, the financial results were to be accepted. Assessee was unabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct. The appeal is accompanied by stay application wherein the assessee is seeking stay of recovery of outstanding demand by the revenue. 2. At the time of hearing, Ld. AR did not press for ground no. 1 which is relating to limitation and jurisdiction. Ground No.3 is related to charging of interest and initiation of penalty proceedings which is consequential / pre-mature in nature requiring no specific adjudication. The only substantive ground is ground no.2 which read as under: - 2.1 That on the facts and circumstances of the case, the Dispute Resolution panel ('DRP') erred in upholding the addition of Rs. 14,41,72,414 made by the Assessing Officer in respect of alleged short Contract Revenue accounted by the Appellant merely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the succeeding years should be excluded otherwise it will lead to double taxation, which is impermissible. 3. The Ld. AR advanced arguments and supported the case of the assessee by drawing our attention to various documents / details as placed on record. The Ld. AR submitted that the assessee has executed fixed price contract and contract revenues earned by the assessee has duly been offered to tax over the life of contract in accordance with applicable Accounting Standard. The Ld. AR further submitted that the impugned additions, if sustained, would amount to double taxation and would result into bringing to tax contract revenues much above than the agreed revenues to be received by the assessee under the contract. The Ld. CIT-DR, on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duration of the project got extended to financial year 2020-21 much beyond the agreed original contract period. It was further stated that the assessee followed percentage of completion method to recognize the revenue. The revenue projections submitted in the course of Sec. 197 proceedings were based on the estimated work completion. However, the revenue shown in financial statements were based on actual work certified by M/s Siemens which is based on survey of work performed. Further, the assessee was unable to complete the work it had estimated and accordingly, it recognized revenue only for the portion of the work that was completed and certified. The assessee also submitted that the estimated costs provided in the aforesaid projections ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has skewed the entire proportion of expense vis- vis revenue and has not really remained in the nature of a Percentage Completion method. Accordingly, the projected revenue of Rs. 2587.75 Lacs was considered to be the turnover of the assessee and the shortfall in revenue for Rs. 1441.72 Lacs was added to the income of the assessee. The Ld. DRP merely endorsed the action of Ld. AO. Considering the direction of Ld. DRP, a final assessment order was passed by Ld. AO on 26-07-2022 making the impugned addition against which the assessee is in further appeal before us. Our findings and Adjudication 5. It could be seen that the whole basis of making impugned addition is the financial projections made by the assessee in an application mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 495.65 Lacs and there is no deviation from the accounting standard as alleged by Ld. AO. 6. We find that in the application made u/s 197, the assessee has merely projected the contract revenue and these estimations could not be taken to be the turnover of the assessee disregarding the actual revenue earned by the assessee. No defect in books of accounts has been pointed out by Ld. AO. The deviation in estimation and actual revenue stood explained by the fact that the duration of the project got extended to financial year 2020-21 which is much beyond the agreed original contract period. The revenue projections submitted in the course of Sec. 197 proceedings are merely based on the estimated work completion whereas the revenue shown in f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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